Housing benefit/Universal Credit: What you need to know
Article Posted - 16th November 2018
Landlords often face some consternation when deciding if they will let to someone on Housing Benefit or Universal Credit (UC). This is understandable given our research* shows that 36 percent of landlords experienced rental arrears in the last year, increasing to 66 percent of those letting to Housing Benefit and UC tenants. The much publicised issues with UC's roll out across the country haven't helped to assuage fears in the landlord community.
However, for those of you letting, or considering letting to housing benefit or UC tenants, we've collated a list of questions from our forum and advice line and answered them here. This is not a comprehensive list, so if you need more detail or your questions aren't answered here, NLA members can call our advice line on 020 7840 8939.
Can Universal Credit be paid to me directly?
Yes, in certain situations. UC brings six different benefits together as a single monthly payment to recipients, who then have to pay rent themselves. If a tenant is in arrears or has difficulty managing their money, you can apply to have rent paid to you directly. To do this you need to complete a UC47 form. Your tenant can also request rent be paid directly to you. The official term for this is a managed payment to landlord (MPTL).
What happens if I'm overpaid?
If you're overpaid via MPTL due to a change that hasn't been reported by either you or your tenant, then you may be asked to repay the balance.
When a MPTL is in place, you must notify the Department of Work and Pensions (DWP) of any changes you can be reasonably expected to know and might affect the tenant's entitlements, such as a change in address.
What are the implications of switching to housing benefit or UC mid-way through the tenancy?
In many cases you will be unaware; DWP won't let you know if your tenant has made a claim for UC, so a good relationship with your tenant is important. If they tell you of their situation in advance, then you may be able to set up a payment plan to mitigate the risk of rent arrears. Money Advice Service has tools and advice if they need help budgeting.
What can you do if the tenant falls into arrears?
If your tenant falls into arrears, there are steps you can take to recover the money through the UC system. However, they must have accrued the equivalent of at least two months' rent and the maximum deduction is 20 percent of the UC standard amount. These deductions will be made via a third party system directly to your nominated bank account. Your tenant may also be eligible for discretionary housing payments to meet a rent shortfall or for other housing costs.
We recommend taking this approach in the first instance, and trying to work with your tenant and local authority to come to a solution. However, there may be circumstances where further action is needed. If you're not sure if you want to go down that route and you're an NLA member, call our advice line and they can talk you through your options.
*NLA Landlord Panel Survey Q3 2018 (690 respondents)
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